Post Office Schemes in India 2025

Posted by  Fintra , updated 2024-10-22

Post offices are not just about circulating letters and parcels. For a long time, the Department of Post under the Ministry of Communication of the Government of India has offered many investment plans and schemes for personal finances. These micro-finance investment plans are commonly referred to as “Post Office Schemes”.

If you're seeking a risk-free investment option that is also an ideal option for tax saving, then, the Post Office Schemes are a one-stop solution for you. These post-office savings schemes have especially been designed for urban and rural investors who are seeking a secured investment avenue and desire to gain the benefit of guaranteed returns. Since they're government-backed savings schemes, they are easy to get enrolled in and require limited documentation. They bear minimum risk as compared to the various other investment options.

As far as investment schemes go, these schemes are a safe and stable option, which is why many senior citizens invest their money in Post Office Schemes. In fact, during the recent Budget 2021 update, it was proposed to exempt the senior citizens from filing income tax returns if their pension income along with the interest income is their only source of annual income. Section 194P, which is a new law rule, was inserted to enforce banks to deduct tax on senior citizens more than 75 years of age having a pension and interest income from the bank.

Looking to invest in such schemes? This article has got you covered. We have prepared a list of everything you need to know about Post Office Schemes India in 2025. In this blog, Fintra will highlight the following points:

1. What Are The Different Types Of Post Office Schemes?
2. What Are The Differences Between Post Office Schemes And Fixed Deposits?
3. How can You Open A Post Office Scheme?
4. Early Withdrawal From Post Office Scheme
5. Post Office Scheme VS Mutual Funds
6. Rate Of Interest
7. Tax
8. Which One Should You Invest In? 

What Are The Different Types Of Post Office Schemes?

The Post Office Schemes consists of a list of schemes that provides risk-free and reliable returns on investments. These securities and returns are perks that an investor associates with the central government's various savings portfolios. The schemes can be availed at all post-offices of India, and one such prominent examples of these schemes are PPF that is operated in public sector banks as well as the post-offices in every Indian city.

Do note that most of all the post office investment schemes are tax-exempt under Section 80C. A few small saving schemes provided by Post Office includes the Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY), National Savings Certificate (NSC), Post Office Time Deposit for a 5 Year Term, and Senior Citizen Savings Scheme (SCSS). Do bear in mind that the interest rates for the schemes are reviewed every quarter by the Government. In other words, the rates applicable keeps changing.

There are a variety of Post Office Schemes to choose from, each plan with its unique features and benefits. Here is a list of all the schemes offered by the Department of Post Office:

PLEASE NOTE: THE BELOW GIVEN INTEREST RATES ARE FROM 01/07/2023 onwards:

A. POST OFFICE SAVINGS ACCOUNT

• Under this scheme, you can open an account only with cash. The minimum balance required to open an account without the cheque facility is Rs. 20 or Rs. 50, and for those accounts that have a cheque facility the amount is Rs. 500.
• This scheme offers an interest rate of 4% per annum, both on individual and joint accounts. Compounded annually.
• You can transfer your post office savings account from one post office in India to another.
• A savings account may either be an individual or a joint account. The maximum number of members of a joint account can be three adults.
• You have to make at least one monetary transaction every three financial years, be it a deposit or a withdrawal.
• This scheme allows you to avail ATM facility.
• The nomination facility is also is available.
• Upon opening the account, you can avail an ATM Card, cheque book, e-banking, and mobile banking services, along with various other services with the account on request.
• Such accounts can be opened in the name of a minor and minors who are above the age of 10 years can open and operate the account.
• Under Section 80TTA of the Income Tax Act, interest up to Rs. 10,000 earned in a Financial Year will be exempted from taxable income.

B. 5-YEAR POST OFFICE RECURRING DEPOSIT ACCOUNT

• Under this scheme, you can open an account by either cash or cheque.
• The minimum amount for opening an account and maximum balance that can be retained: The minimum amount is Rs. 100 per month or it can be any amount in multiples of Rs. 10 with no maximum limit.
• A nomination facility is also is available while opening the account.
• The tenure of the account is fixed for five years.
• This scheme will offer you an interest rate of 6.7% per annum, on a quarterly compounded basis.
• This type of account too can be transferred from one Indian post office to another.
• A maximum of two to three adults can hold a joint account, even a single adult can open an account. The account can also be opened in the name of a minor who is above the age of 10, and/or guardian of the individual of unsound mind/minor. One can also open multiple accounts in the post office.
• The individual is required to make monthly investment into the account and if it defaults to make a subsequent deposit, a default fee will be charged.
• The account can also be closed prematurely only after 3 years from the date of opening the account. 
• If you make an advance deposit of at least six instalments, you can expect a rebate.
• After one year, you can withdraw as much as fifty percent of the total balance of the account.

C. POST OFFICE TIME DEPOSIT ACCOUNT (TD)

• Under this scheme, you can open your account with either cash or a cheque.
• A maximum of three adults can hold a joint account, even a single adult can open an account. The account can also be opened in the name of a minor who is above the age of 10, and/or guardian of the individual of unsound mind/minor.
• The interest rates on deposit accounts are 6.9% on a one-year account, 7.0% on a two-year account, 7.0% on a three-year account, and 7.5% on a five-year account.
• Do note that the interest is payable annually but it’s calculated quarterly.
• The minimum amount required to open the account is Rs. 1000 and in multiple of Rs. 100. There’s no maximum limit.
• The account can be transferrable from one post office to another.
• The account can also be converted from a single account into a joint account and vice versa.
• One can also open multiple accounts in any post office.
• A nomination facility is also available.
• When the tenure of TD matures, the same tenure will automatically renew again with the prevailing rate of interest on the day of maturity.
• The investments that have been made for 5 years qualify for the tax benefit of section 80C of the Income Tax Act.
• Premature withdrawal is only allowed after 6 months from the date of opening the account.

D. POST OFFICE MONTHLY INCOME SCHEME ACCOUNT (MIS)

• This kind of account, like most post office schemes, can be opened by both cash and cheque.
• The interest rate is 7.4% per annum, compounded monthly and paid.
• This account also offers a nomination facility.
• Maximum three adults can hold a joint account, all account holders have equal share and rights. Even a single adult can open an account. The account can also be opened in the name of a minor who is above the age of 10, and/or guardian of the individual of unsound mind/minor. One can also open multiple accounts in the post office.
• An individual can open an account with a minimum of Rs. 1000 and make deposits in multiples of Rs. 100. The maximum investment limit in a single account is Rs. 4.5 lakh and Rs. 9 lakh in joint accounts.
• The account can be transferred from one post office to another.
• One can’t prematurely close the account before completing a year.
• The premature closure beyond a year may attract penalties.
• This scheme provides guaranteed fixed monthly income on the lump sum investment done by the investor.
• One can do premature withdrawals only after completing one year after deducting 2% from the deposit amount.
• The interest is payable monthly from the date of opening and will continue till maturity. 
• If the interest amount that is earned every month isn’t claimed by the account holder then the interest won’t earn any additional interest. 
• The interest income is taxable in the hands of the depositor.
• No TDS on the interest payout.
• The maturity term is 5 years.
• A nomination facility is also available.

E. SENIOR CITIZEN SAVINGS SCHEME

• As the name suggests, this scheme is exclusively for the elderly, and the minimum age to apply or obtain this scheme is 60 years. Those who have taken voluntary retirement after 55 years of age are also eligible to open this type of account within the month it begins receiving the benefits of retirement.
• Do note that the investment amount in the scheme can’t exceed the corpus value that an individual obtains on retirement.
• Per individual the maximum limit allowed of the investment is Rs. 15 lakh and the investment amount can be in multiple of Rs. 1000.
• The interest rates payable are 8.2% per annum, compounded quarterly and paid.
• This scheme has a maturity period of five years.
• Premature withdrawals of deposits are allowed only after one year with a penalty of 1.5%. A penalty of 1 % is levied after 2 years of deposit.
• Upon reaching the maturity period, after the scheme matures, the individual can extend the account for three more years.
• Investments made in this scheme do qualify for tax benefits under Section 80C of The Income Tax Act. However, the tax will be deducted at the source if the amount of interest exceeds Rs.50,000 in a financial year.
• If the interest amount that is earned every quarter isn’t claimed by the account holder then the interest won’t earn any additional interest. 
• For an amount under Rs 1 lakh, the account can be opened via cash. For an amount above 1 lakh, however, you have to open the account through cheque.
• Only the spouse can be the joint account-holder. You can open as many accounts as you want. The account is transferrable.

F. 15-YEAR PUBLIC PROVIDENT FUND ACCOUNT

• You need a minimum of Rs 500 to open a PPF account in a post office. Deposits can be made in instalments or lump-sum. The maximum amount you can deposit in a financial year is Rs. 1,50,000.
• The rate of interest payable is 7.1% per annum and it’s compounded annually. This interest is tax-free under the Income Tax Act.
• Deposits do qualify for tax deduction under Section 80C of the Income Tax Act.
• This type of scheme does not allow joint accounts. However, a single adult who’s a resident of India and a guardian on behalf of a minor/person of unsound mind can open the account. ​
• Do note a person can only open one account across India in a Post Office or any bank.
• You may make 1 withdrawal during a financial after five years excluding the year of account opening.
• The account will mature after fifteen years. Before that, you cannot close the account.
• The account is transferrable and offers nomination facilities.
• From the third financial year of the account, you can avail of loan facilities.
• A nomination facility is also available.

G. NATIONAL SAVINGS CERTIFICATES (NSC)

• You need a minimum of Rs. 1000 to open an account and investments can be done in multiples of Rs. 100. No maximum limit.
• One can open multiple accounts under this scheme.
• The deposits do qualify for tax deduction under Section 80C of the Income Tax Act.
• The rate of interest payable is 7.7%, to be compounded annually but it’ll be payable at maturity.
• A certificate can be purchased by an adult, for himself or herself, or for a minor.
• Maximum three adults can hold a joint account, all account holders have equal share and rights. Even a single adult can open an account. The account can also be opened in the name of a minor who is above the age of 10, and/or guardian of the individual of unsound mind/minor.
• The deposits mature after five years from the date of the deposit.
• NSC can not be prematurely closed before 5 years, except under certain conditions.
• NSC can be transferred from one person to another person only under certain conditions.

H. KISAN VIKASH PATRA (KVP)

• A minimum of Rs 1000 is required to open an account and investments can be done in multiples of Rs. 100. No maximum limit.
• The rate of interest payable is 7.5%, to be compounded annually. The amount invested will get doubled in 115 months (9 years & 7 months).
• Maximum three adults can hold a joint account. Even a single adult can open an account. The account can also be opened in the name of a minor who is above the age of 10, and/or guardian of the individual of unsound mind/minor. One can open multiple accounts.
• An adult can purchase a certificate, either for himself or herself or for a minor.
• Nomination facilities are available.
• The certificate can be cashed only after at least two and a half years. The KVP can be prematurely closed at any time before reaching the maturity period only under certain conditions.
• KVP can be transferred from one person to another only under certain conditions.

I. SUKANYA SAMRIDHI (SSY)

• The rate of interest is 8.0% per annum, compounded annually.
• The minimum amount required to open an account is Rs 250 and the maximum is Rs. 1,50,000 in a financial year. Deposits can be in multiple of Rs. 50 or in a lump-sum. There’s no limit on the number of deposits done in a month or in a financial year.
• This type of scheme is for the welfare of the girl child and can be opened for female children only. It is commonly referred to as the “girl child deposit scheme”.
• The legal or natural guardian can open the account on behalf of the girl child who’s below 10 years of age.
• The interest earned is tax-free under the Income Tax Act.
• Only one account can be opened in the name of the girl child and this account can be opened for a maximum of two girls in a family.
• Account will be operated by the guardian only till the girl child reaches the age of majority (18 years).
• To keep the account active, a minimum deposit of Rs. 250 must be made every year.
• After the child reaches 21 years of age, the account can be closed.
• Deposits can be made for maximum 15 years from the date of account opening.
• The account can prematurely close only after 5 years of account opening under certain conditions.   

What Are The Differences Between Post Office Schemes And Fixed Deposits?

This is one of the most FAQs of investors, especially the first-timers. Most investors are confused between postal office schemes and fixed deposits. They wonder which one would be better for them. However, it all boils down to the investor’s needs, conveniences, and financial goals. 

If you are looking for a reliable, stable option, then you should go for post office schemes. The interest rate of post office schemes is pretty much fixed, while the interest rates of a bank FD may go up or down, depending on the economy. Thus bank Fixed Deposits are riskier, but there is also a chance of a higher reward.

In the case of bank Fixed Deposits, the minimum deposit amount is usually higher than that of a post office account. You must be an Indian to open a post office scheme, but there are no such restrictions in case of a bank Fixed Deposits. In fact, many banks offer a higher rate of interest to NRI investors. A post office account can be closed after six months but before one year. After that, you cannot close your account before its completion. On the other hand, most banks nowadays allow premature withdrawal or closure of accounts.

So here are the comparisons between post office schemes and fixed deposits. Do a thorough research of your own, weigh in your options, and then choose carefully.

How can You Open A Post Office Scheme?

Opening a post office account is pretty simple. The minimum amount required for each scheme is stated above, as well as the required deposits to sustain the accounts. All you have to do is go to your nearest post office and talk to the branch superior and follow the below-mentioned steps:

• Obtain the required account opening form for the scheme you desire to opt for. You can also download the forms online by visiting the India Post’s official website.
• Fill the form with your details and submit them along with your KYC proof and photographs, and other required documents as per the post office scheme you’ve opted for.
• Complete the enrolment by depositing the required amount as per your desired investment scheme.

Of late, the central government has authorized all public sector banks and private ones like ICICI Bank, Axis Bank, and HDFC Bank to allow investors to open Post Office Schemes.  

Early Withdrawal From Post Office Scheme

For a long time now, post offices of India have been offering investment schemes for personal, small-scale finance. Risk-free and stable, these post office schemes are very much preferred by the elderly, as they find such investment options reliable.

The Post Department of India offers several types of investment schemes such as the following:

• Post Office Savings Account
• Post Office Recurring Deposit Account
• Senior Citizens Savings Scheme
• Post Office Monthly Income Account Scheme
• 15 year Public Provident Fund Account
• Kishan Vikash Patra
• Sukanya Samriddhi Accounts
• National Savings Certificate

These schemes have different rates of interest as well as different maturity periods. Premature withdrawal is allowed on most schemes. The conditions on premature withdrawal or closure in the schemes are:

• In the case of the Post Office Savings Account, premature withdrawal is allowed after one year of opening the account.
• For Post Office Recurring Deposit Account, the tenure is 5 years. However, after one year, a withdrawal of about 50% of the balance can be made. In case of the death of the subscriber, full maturity value can be received by the nominee if he or she is able to fulfil certain conditions.
• Senior Citizens Savings Scheme has a maturity period of 5 years. Premature closure is allowed after 1 year. In that case, however, there is a 1.5% deduction of the deposit.
• The Post Office Monthly Income Scheme, too, takes 5 years to mature. You can prematurely en-cash the account after 1 year but upon a deduction of 2% of the deposit.
• The Public Provident Fund Account takes 15 years to mature. Premature closure is not allowed. However, one withdrawal can be made every year after the completion of 7 years of the account.
• The Kishan Vikash Patra scheme allows the certificate to be cashed after two and a half years of issuing it.
• In the case of Sukanya Samriddhi Accounts, the account can be closed after 21 years. Partial withdrawal of about 50% of the deposit is allowed after the girl child is of 18 years. Premature closure can also be made after the child reaches 18 years of age, but only in the case of marriage or higher education.
• The NSC takes 5 years to mature. Premature closure or withdrawal is not allowed.

Post Office Scheme VS Mutual Funds

In the previous articles, we have talked about different kinds of post office schemes, their features, the pros, and cons, how to invest in them, etc. When it comes to investment options, many people are confused about whether to invest in a post office scheme. Well, no need to fret, in this article we will compare the features, drawbacks, and benefits of post office schemes and mutual funds. After reading this article, you can make the investment choice that suits your financial needs and preferences the most.

When it comes to choosing between a post office scheme or mutual fund, here are some following features worth considering:

Rate Of Interest: Post office schemes are sponsored by the Government of India. So, as an investment option, it is definitely safer than a mutual fund. For most post office schemes, the rate of interest is fixed, payable monthly, quarterly, or annually. Also, post office schemes offer a maturity bonus. Mutual funds, on the other hand, offer better liquidity and returns. However, they do not have any fixed rate of interest and their returns depend on the condition of the market. In mutual funds, you can either make a big gain or a big loss. There is no such gambling in post office schemes. So, if are ready to take a risk in order to make a chunk of money, go for mutual funds. If you want your money to be safe and can settle for a lower rate of interest as long as it is regular and stable, stick to post office schemes.

Tax: Mutual funds offer a monthly dividend that is subjected to a dividend distribution tax of 10% per investor. If you choose to sell the units within a year of opening the account, then the gain would be subjected to your income tax slab. If you sell the units after the completion of one year, then you would gain a 10% long-term capital gain tax. The interest income of post office schemes is subjected to the subscriber’s personal income tax slab. However, most post office schemes are eligible for tax exemption under Section 80C of the Income Tax Act of 1961.

Which One Should You Invest In?

To answer this question, you can read through this article and decide for yourself. When it comes to investment options, there are no good or bad choices. It all depends upon your personal financial goals and needs. If you are looking for higher returns, it is advisable that you invest in a mutual fund. However, you should invest in a mutual fund with a maturity period of at least 2-3 years. On the other hand, if you do not want your money to be exposed to the capricious market and just want regular amounts of a fixed return, the post office scheme is perfect for you.

Conclusion

In conclusion, these Post Office Saving Schemes have managed to remain popular amongst Indians due to their feature of being low risk and easy availability. Post Office schemes in general are various investment avenues that inculcate the saving habits among the Indians. These schemes suit those who have a low-risk appetite, and the returns obtained from these schemes aren't prone to market fluctuations. For these reasons, the schemes are suitable investment tools for risk-averse investors who desire to make the most of their savings. Above all the major advantage of opting for them is that most of the schemes provide tax benefits under Section 80C of the Income Tax Act 1961 which one can avail with ease in rural and urban areas alike.